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Saving grace

City leaders are prudent to rebuild rainy-day fund

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Columbus’ mayor and council are wisely putting the city on firm footing and protecting it from
economic shock by boosting its rainy-day fund.

Mayor Michael B. Coleman, in rolling out his 2013 budget, had proposed adding $10 million to the
depleted emergency account. The council agreed wholeheartedly — and then some. On Monday, it plans
to tap $3 million in unanticipated revenues for the fund, on top of Coleman’s $10 million. It's a
substantial demonstration of council's desire to be a good steward of city finances.

That would give the city a total of $53 million in its savings account toward a $75 million
goal.

Such cooperation is not only admirable, it is rare. In Washington, federal politicians are
spending every available — and borrowed — dollar as fast as they talk. Columbus is demonstrating
what fiscal prudence looks like.

The mayor’s and council’s solid management is the reason Columbus is the only city of its size
to hold the highest-possible AAA credit rating from all three major rating agencies. A sufficient
rainy-day fund serves as assurance for investors, benefiting taxpayers with lower interest rates on
debt issued for roadwork and other projects. And it provides insurance for residents. If hard times
return; the city will be prepared.

The city’s $53 million in savings is a barely sufficient, 7 percent cushion in a $766 million
budget. It would allow the city to continue operating, protecting residents and providing basic
services, for only 25 days. And those millions surely would be helpful in the event of a major
flood or devastating tornado.

The value of Columbus’ rainy-day fund was driven home rather painfully in 2003, when the city
had to start making withdrawals to prevent police and firefighter layoffs. The city burned through
$91 million in savings between 2003 and 2009, when Columbus voters agreed to raise the city income
tax a half-percentage point to 2.5 percent.

As part of the bargain with voters, the mayor pledged to rebuild the rainy-day fund — then a
withered $15 million — to $50 million by 2014. With the council's assistance, Coleman will keep
this promise a year early, but now recognizes that this is not enough, hence his November proposal
to raise the total to $75 million by 2018.

The city could set aside, as credit-rating agencies recommend, as little as 8 percent to as much
as 15 percent of its yearly expenses. That would put Columbus’ saving at $61 million to $115
million. City Auditor Hugh J. Dorrian recommends 10 percent, meaning the rainy-day fund would grow
with the annual budget.

The city’s budget is tight, and its needs are many. The council is to be applauded for
exercising restraint by not spending all of a $7.5 million windfall from income and estate-tax
collections.

In the Dorrian’s words: “When you have an opportunity to save a little, you should.”